he Kenya Transporters Association (KTA) has announced plans to increase transport cost by 15 percent to cushion its members against huge losses due to the recent oil price increase. The Energy Regulatory and Petroleum Authority (EPRA) on 14th March 2021 announced new oil prices that saw the cost of all fuels go up.
Fuel price accounts for 35 percent of transport business. In addition, prices of the other direct costs including spare parts, tyres among others have increased in the last months, according to advisory notice by KTA.
“This is an advisory to forwarders, importers, manufacturing companies and the general business community to expect and factor in a minimum of 15 percent increase in transport cost,” the advisory issued by KTA board on 18th March 2021 reads in part.
Petrol prices have hit a nine-year high on rising crude costs in the global market, piling inflationary pressure on the country’s economy.
Motorists in Nairobi will pay Sh122.81 per litre of diesel from Sh115.18, representing a Sh7.63 increase, and Sh5.75 more for a litre of super petrol at Sh107.66.
The EPRA linked the expensive fuel to the recovery in crude oil prices, which increased the cost of imported refined fuel, from $55.27 a barrel to $61.61 and low $17.64 in April last year.
Petrol will this month retail at level last seen in November 2011 while diesel is selling at the highest level since December 2018.
The EPRA said that the regulations to manage the subsidy were not yet ready despite the State having collected billions of shillings from motorists since July.
Under the subsidy scheme that excluded petrol and started in July Kenyans were not expected to bear costs of diesel prices above $50 a barrel.
“The Free on-board price of Murban crude oil lifted in February 2021 was posted at $61.61 an increase of 11.47 per cent from $55.27 per barrel in January,” said Epra while announcing prices that will last till April 14.
Kenya uses diesel for transportation, power generation and running of agricultural machinery such as tractors with a direct impact on the cost of farm produce.
Inflation rose from 5.8 per cent in February from 5.7 per cent in January, largely driven by cheap fuel and food prices.
Petrol prices have jumped Sh15.82 over the past two months, making it one of the biggest jumps over the period since 2007 when official data on fuel prices are available.
Kerosene prices rose to Sh97.85 in the capital city, up from Sh92.44 in February, reflecting a Sh5.41 rise.
Crude prices have soared to pre-virus levels in recent weeks, driven higher by the production cuts by the OPEC nations and the mass rollout of Covid-19 vaccines in many high-income countries.
While demand for oil is still lower than normal, there are hopes of a speedier than expected economic recovery as vaccines are rolled out.